Jaypee pitches asset sale to seek debt recast

MUMBAI: The Jaypee Group, at an emergency meeting with a consortium of 30 lenders led by the State Bank of India (SBI), has sought refinancing of debt on the back of a Rs 17,000-crore asset sale programme. The meeting, held earlier this week, had been called by the lenders because the group is believed to have delayed an interest payment of about Rs 3,000 crore. On its total debt burden of Rs 81,000 crore, interest payments of Rs 8,000 crore are due in the next five months by March 31, 2015.
When contacted by TOI, Manoj Gaur, chairman and CEO of Jaypee Group, confirmed the meeting with the banks and said he remains committed to the group’s divestment process which began in 2012. He claimed it was the biggest in Indian corporate history and said the group’s intent was to ensure that it’s account remains regular with banks. “Asset sales worth Rs 17,000 crore are currently under different stages of negotiations. Of this, power accounts for assets worth Rs 13,000 crore and cement for Rs 3,800 crore,” Gaur said.
Sources say the group has initiated talks to generate another Rs 8,000 crore through sale of other assets, including some in real estate. “The banks have already agreed to refinance Rs 6,500 crore of the Rs 10,000 crore of loan proposed to be refinanced by the ailing group. The Rs 3,500 crore of fresh refinancing was discussed at the meeting and is likely to be approved,” an informed source said. A banker said a decision will have to be taken by each bank’s board, and that too after the company meets certain conditions.
Jaypee Group’s overall market cap is pegged at Rs 13,260 crore or a sixth of the total debt of Rs 81,000 crore as on March 31, 2014. The group is not the only one to struggle under a mounting debt burden. Most infrastructure companies share its plight. An email sent to the SBI remained unanswered till the time of going to print. However, multiple sources confirmed the meeting held at SBI headquarters on Monday and discussions on refinancing the group’s debt.
The Delhi-based group is banking on selling its power, cement and other assets to de-leverage its balance sheet. After two successive failed attempts in the last one year to sell its power assets to Abu Dhabi-based Taqa and Anil Ambani-owned Reliance Power, the company last month signed yet another MoU with Sajjan Jindal-led JSW Group.